The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Unfortunately, the market reaction has been unsurprising for an RNS that says to me simply "more delays, costs, debt/dilution, reduced potential for profits, and increased overall risk - that the management didn't adequately prepare for or predict, whilst sending out messages of good progress". Benefit-risk ratio looks worse from the RNS and the market has reacted.
Well, he's out of luck!
The cat landed, didn't bounce, it flatlined.
If he tried to trade on a bounce...... LOL.
Latino is a trader who is after a quick buck. He'll be long gone in a day or two...possibly even gone already!
Sure, dead cats do bounce, but not that high.
Mind the bounce..
@Latino, you seem to misunderstand the basics of valuing a company.
We don't know how much of a funding shortfall there is. We haven't been told.
We don't know how many shares they are going to have to issue to raise the (unknown amount of) capital needed. So with reduced productivity, over a longer period of time we don't know what income number to use. Even if we could make a wild stab at the MCAP, we don't know what the fully diluted shares in issue will be post this emergency funding. So there is now way of working out the sp.
If this is left for 6 months = disaster!
Who would invest on that basis?
Very bad management IMO. Even the S04 twitter feed is crazy, their description is still showing Q1 2021 for first production!
This all needs sorting now.
Not implying they wait this year end of course, but the point is they have 4-5 months to raise and could be even 6 if they manage cost better. They are not in a desperate position as the some are implying...they just need to get the plant feed programme underway again and best to then fund raise.
You all are aware of grim shades of AIM market statistics, right? That's why it is called "alternative"..
But everyone keeps thinking they can beat it..
Broad portfolio diversification standards in investment are not just for nothing, especially here .. no matter how confident (delusional) you're in making right call about whatever company position is taken with.
@Latino.
If you were to invest, on what basis do you make a valuation to decide?
Awaiting funding, so is this to be a loan? If so what is the cost implication on P&L?
If to be an issue, how much dilution? at what price?
SO where do you pitch the price point to buy in? 16p? 7.72p? (i.e. now) 5p?
You just don't know until the funding details are known. This simply means the only buyers will be speculators/gamblers until we get clarity on this funding. More sellers than buyers means this will keep going down until we have numbers to rely on.
Waiting until year end is a big NO.
Brilliant last paragraph WelshFalcon, just about sums things up. The RNS states that details of funding will be released by 16th August which I feel will not make pleasant reading. Unless I misunderstand ASX listing remains closed until that occurs.
Nope...read carefully they need funding before end of 2021!
From the RNS "As a result of the revised pond ramp-up schedule and associated delayed plant feed salt availability, forecasted SOP production for FY'22 has been reduced and the Company will require further funding before the end of 2021 to continue operations at Lake Way. "
So yes, they need the funding now so that it is in place before the end of 2021.
This sort of woolly thinking and lack of having a contingency in place (for a new plant that may have commissioning delays) is why we are here. So lets just wait until nearer year end shall we, and panic fund then?
It appears, they don’t need the funding yet but by end of year. So they have time to get secure the funding and will start producing also by then...it’s not going bust and most likely change of BoD coming!
Pretty dreadful update with the tiniest glimmer that at least the plant can produce some product. However the company is not viable until production is ramped up which frankly with this companies record may never happen. No announcement on funding yet and the dilution will be brutal when it comes. I wonder if this will end in so called death spiral funding on incredibly brutal terms. Hard to see anything else in my opinion.
Absolutely, remains uninvestable until funding arranged, must of been forced to be restored which can only lead to one way traffic until the mess is sorted by the board.
I don't think that this is as bad as SXX!
All the infrastructure and plant is in place along with offtake agreements (assuming they survive a production delay). We just need to see what the cost of this mismanagement is this time!
It does raise a question mark over future plans (post Lake Way production starting). How is funding going to be managed ramp up and development of our other assets? Will we continue to have the same 'unforeseen' events without proper contingency funding in place?
But, yes, destroying value in this way does leave us open to a predatory takeover.
Should we be looking for a new CEO?
wow, one of those deja vu feelings, where did I see it? ohh, sirius minerals - another Australian guy was promising to sort out funding and rapidly ramp-up production .. didn't work that well, was ripped-off to pieces by predatory sharks..
My thoughts:
We seem to have a CEO with overly optimistic views. Is it twice, now we have been led to believe that we were fully funded to first production?
This latest mess seems to be simply an expected glitch in commissioning a newly constructed plant where quality of feedstock and processing efficiency should be tested and adjusted. This is not an unexpected event - so why was there not some contingency funding in place for just this sort of event?
I am at a loss to understand, having stopped trading on both ASX and AIM, we have a resumption of trading on one platform only? This being prior to any agreement on this (yet another) emergency funding. Aim, being a volatile and highly reactive platform, will now show a value and MCAP for the company based on rumour and speculation. Meanwhile S04 are trying to negotiate additional funding. Surely it would be best for all shareholders to negotiate the funding before a resumption of trading? The current way may well produce excessive dilution by using a low value derived from AIM, rather than a negotiated funding package guiding the market over value with a resumption of trading after agreement!
There will be little appetite to invest until the funding situation is known with consequent downward pressure on pricing until known. This reducing value is going to be considered by any potential funding party. Have we just been plunged into a downward spiral?
Very poor leadership.
I may just average down. Need to wait for the brutality to stop first. This may be worth a long term punt after financing. As badly managed as this may have been, there are still over 400k tonnes of offtake agreements in place.. Maybe 5p is the top up range. Sheesh...
I'm in a similar boat Thompi. Not sure what to do, I think I'll just forget about this company but hold the shares to see what happens. I'm too far down to sell and I've lost all faith to think about putting more in to average down
Ouch, yes carnage. I was was already over 50% down on my investment before the announcement. Barely anything left of it now. Always the risk with Aim I suppose. Bad luck to everyone one else in the same boat.
Expecting carnage to follow...
Good morning all.
Please see 2 SO4 RNS SO4 on ASX website.
Worth a read for update of the latest news on SO4.
I also agree with Lootgaloots comments particularly the comments wrt messages on Twitter, highly misleading. I'm wondering if in a short while the odd head may roll. Whilst this might seem unlikely due to members of the board having fairly decent shareholdings the influence from this will be completely dwarfed by the influence of a possible lender. If the project is seriously behind and the business at risk its not outside the bounds of possibility that someone near the top of the tree will be held accountable. Its also possible someone towards the top in engineering and maybe technical will be swept away. This might not happen immediately but even if funding is forthcoming I cant see any lender being too forgiving of the mess the company finds itself in. There's one heck of a lot of money committed to this.
Thanks lootgaloot for your detailed reply which I totally agree with.
Your final paragraph hits a key point for me since I feel I have been mislead by bullish tweets from CEO that all is fine and progressing well, which we now discover was just wishful thinking.